HP Labs isn't the only R&D facility in the Silicon Valley. In fact, it isn't even the biggest one. But it counts a string of innovative breakthroughs to its name.

And despite recent management changes, and the distraction of numerous acquisitions, the prototypical Silicon Valley firm, which started in a garage, has kept its investment in R&D high with some $3.5 billion slated for this year, of which about 5 percent is used by its labs.

HP Labs in Palo Alto employs 400 people and is one of six labs worldwide with a total of 700 employees.

''Some other labs have gone through a kind of pendulum of speculative research and then switched to a very short-term payback focus, but we've always been very focused on innovating to solve real customer problems. We're not ivory tower, we meet with customers all the time.''

A project launched at the labs three years ago, Enterprise 2010, tries to forecast what the demands of tomorrow's data-center customer will be and how best to address them.

One big aspect of that is HP's work in utility computing -- the idea of pay-as-you-go access to computing resources.

Other companies, notably Sun Microsystems, with its grid utility model, are pushing a similar scheme. Sun is essentially saying ''come and get it'' with dollar-per-hour-per-CPU pricing, while HP is working with a few select clients to develop the program.

''We're very early on with this idea of offering temporary or peak capacity on a per-use or as-needed basis,'' Frank Gillet, principal analyst at Forrester Research, told internetnews.com. ''There are a handful of early experimenters, but the software providers aren't necessarily ready to do it yet; a lot of work still remains.''